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Vaahto Group Plc Oyj Interim Report for September 1, 2008 – February 28, 2009

VAAHTO GROUP PLC OYJ INTERIM REPORT 17.4.2009 at 10.00

VAAHTO GROUP PLC OYJ INTERIM REPORT FOR SEPTEMBER 1, 2008 – FEBRUARY 28, 2009

Vaahto Group’s turnover for the period under review was 32.3 million euros (compared with 41.8 million euros for the corresponding period in the previous fiscal year), with an operating loss of 2.8 million euros (comparative: operating profit of 0.2 million euros). Turnover saw a decrease of 23% from that of the reference period, undermining the result significantly. Vaahto Group’s order backlog decreased during the period; it was 54.4 million euros at the beginning of the period and 43.2 million euros at the period end.

Pulp & Paper Machinery

The Pulp & Paper Machinery division’s turnover for the period under review was 18.7 million euros (23.3 million euros), with an operating loss of 3.5 million euros (operating loss of 1.8 million euros). The turnover decreased by 20% from that of the reference period, and the division’s result was unprofitable. Together with decreased turnover, the result was affected by poor profitability of projects entered in the accounts during the period under review.

The investment level for forest industry is very low globally, and the marketing environment for the Pulp & Paper division is extremely challenging. In this tough competitive situation the most significant new orders for the division were the board machine rebuilding for Stora Enso in Inkeroinen, and the headbox project for Stora Enso’s board machine in Imatra.

The Pulp & Paper Machinery division’s order backlog decreased during the period under review. However, the large orders received at the end of the previous fiscal year ensured that the division’s order backlog at the end of the review period was significantly larger than a year earlier. The results of these projects will be entered in the accounts mainly in the latter part of the current fiscal year.

In the period under review, the division took action to merge Vaahto Roll Service Oy, part of the division, with Vaahto Oy. The purpose of the merger is to simplify the Group’s structure, diminish expenses, and further develop the operations of the Vaahto Pulp & Paper Machinery division.

Process Machinery

The Process Machinery division’s turnover for the period under review was 14.2 million euros (18.5 million euros), with an operating profit of 0.7 million euros (2.0 million euros). The turnover decreased by 24% from that of the reference period, making the result lower than in the reference period.

The Process Machinery division’s market situation has deteriorated rapidly, and the order backlog has decreased for both tanks and agitators. The most significant deal made during the period under review was the order received by Japrotek Oy Ab for a nitric acid absorption tower for Uhde in Indonesia. The division still has a significant number of customer projects in the offer phase, but decisions on the realization of the projects have been delayed due to the current economic climate.

Research and development

The Group’s research and development activities concentrate for the most part on improving the competitiveness of the Pulp & Paper Machinery division’s key components for paper and board machines, and that of roll servicing. The scope of the Group’s R&D activities remained the same as in the previous fiscal period.

Investments

The Group’s capital expenditure for the period came to 2.4 million euros (1.1 million euros). The most significant investment was the acquisition of an FPT broaching drill for Vaahto Oy. Other investments consisted mainly of smaller machinery and equipment acquisitions and of investments in information systems.

Financing

The Group’s cash flow for the period under review was -1.7 million euros (2.6 million euros), with an investment cash flow of -2.4 million euros (-1.1 million euros). The increase in debt, including interest, was 6.7 million euros.

The total of the consolidated balance sheet was 46.7 million euros (45.9 million euros). The Group’s equity ratio decreased to 25.1% (35.4%).

Personnel

The number of Group personnel averaged 417 (427) over the period.

Share issue authorizations

The Board of Directors has no authority to issue new shares, convertible bonds, or bonds with warrants, nor the authorization to obtain or surrender shares.

International financial reporting standards

The interim report was drawn up in accordance with International Financial Reporting Standard (IFRS) IAS 34 (“Interim Financial Reporting”).

Forecast of developments

The international financial climate has led to great insecurity in the market and the postponement of investment decisions.  The market situation is thus highly challenging, and Vaahto Group’s order backlog decreased in the period under review. During the period under review the Group companies have taken action to adjust their operations to the current demand and market situation.

The results of these projects will be entered in the accounts mainly in the latter part of the current fiscal year. The result for the second half of the fiscal year is expected to improve from the first half, but the turnover for the entire fiscal year will remain unprofitable.

Interim management statement

During the second half of the fiscal year lasting from September 1, 2008 to August 31, 2009, Vaahto Group Plc Oyj will publish an interim management statement instead of an interim report of operations during a nine month period. The interim management statement will be published on June 26, 2009.

 

CONSOLIDATED INCOME STATEMENT, IFRS

1000 EUR

Interim

Report

1.9.2008-

28.2.2009

6 months

Interim

Report

1.9.2007-

29.2.2008

6 months

Annual

Report

1.9.2007-

31.8.2008

12 months

Net sales

32 280

41 828

73 207

Change in finished goods and work in progress

-1 085

245

92

Production for own use

566

264

693

Other operating income

35

61

688

Share of profits of affiliated companies

25

14

14

Material and services

-17 369

-23 750

-39 404

Employee benefit expenses

-10 962

-11 519

-21 082

Depreciations

-1 467

-887

-2 220

Other operating expenses

-4 781

-6 051

-11 339

Operating profit

-2 758

204

649

Financing income

54

78

70

Financing expenses

-540

-339

-796

Profit or loss before taxes

-3 244

-57

-77

Tax on income from operations

843

86

396

Profit or loss for the period

-2 401

29

320

Net profit or loss attributable:

To equity holders of the parent

-2 372

-19

238

To minority interest

-28

47

82

Total

-2 401

29

320

Earnings per share calculated on profit attributable to equity holders of the parent:

EPS undiluted, euros/share

-0,83

-0,01

0,08

EPS diluted, euros/share

-0,83

-0,01

0,08

Average number of shares (1000 shares)

2 872

2 872

2 872

 

CONSOLIDATED

BALANCE SHEET, IFRS

1000 EUR

Interim

Report

28.2.2009

Interim

Report

29.2.2008

Annual

Report

31.8.2008

Assets

Intangible assets

2 441

651

3 127

Goodwill

1 702

1 702

1 702

Tangible assets

15 803

14 847

14 198

Shares in affiliated companies

62

38

39

Non-current trade and other receivables

13

13

13

Other long-term investments

44

44

44

Deferred tax asset

1 446

332

471

Non-current assets

21 510

17 627

19 594

Inventories

7 993

8 466

8 508

Trade receivables and other receivables

15 724

17 373

12 392

Tax receivable, income tax

1 017

100

624

Cash equivalents

0

950

0

Cash and bank

440

1 405

730

Current assets

25 174

28 294

22 253

Total assets

46 684

45 921

41 847

Equity and liabilities

Share capital

2 872

2 872

2 872

Share premium account

6

6

6

Other reserves

1 787

2 173

2 006

Retained earnings

4 905

7 277

7 537

Equity attributable to equity holders of the parent

9 570

12 328

12 421

Minority share

1 262

1 302

1 336

Shareholders’ equity

10 832

13 630

13 757

Deferred tax liability

725

997

736

Long-term liabilities, interest-bearing

7 429

4 130

7 378

Non-current provisions

271

394

271

Non-current liabilities

8 425

5 521

8 385

Short-term liabilities, interest-bearing

11 164

7 757

7 087

Trade payables and other liabilities

16 197

19 012

12 618

Tax liability

67

1

1

Current liabilities

27 427

26 770

19 705

Liabilities

35 852

32 291

28 090

Total equity and  liabilities

46 684

45 921

41 847

KEY FIGURES, IFRS

Interim

Report

1.9.2008-

28.2.2009

Interim

Report

1.9.2007-

29.2.2008

Annual

Report

1.9.2007-

31.8.2008

Operating profit or loss 1000 EUR

-2758

204

649

Operating profit or loss % of turnover

-8,5

0,5

0,9

Return on equity %

-19,5

0,2

2,2

Return on investment %

-9,4

1,1

2,6

Earnings per share EUR

-0,83

-0,01

0,08

Shareholders’

equity per share EUR

3,33

4,25

4,32

Solidity %

25,1

35,4

37,3

Gearing

167,6

69,9

99,8

Order backlog 1000 EUR

43 194

33 464

54 384

Gross investments

1000 EUR

2 385

1 120

4 613

Total average number of personnel

417

427

426

 

CONSOLIDATED FLOW OF

FUNDS STATEMENT, IFRS

1000 EUR

Interim

Report

1.9.2008-

28.2.2009

6 months

Interim

Report

1.9.2007-

29.2.2008

6 months

Annual

Report

1.9.2007-

31.8.2008

12 months

Profit or loss before taxes

-3 244

-57

-77

Adjustments

1 655

891

1 817

Change in working capital

434

2 073

337

Financial income and expenses and taxes

-553

-318

-840

Flow of funds from operations

-1 707

2 590

1 236

Investments in tangible and intangible assets

-2 385

-1 120

-4 613

Income from sales of tangible and intangible assets

7

5

650

Flow of funds from investments

-2 378

-1 115

-3 963

Increase of the interest-bearing liabilities

6 135

2 061

10 566

Decrease of the interest-bearing liabilities

-2 007

-1 428

-7 355

Dividends

-333

-1 287

-1 287

Flow of funds from financial items

3 795

-654

1 923

Change of liquid funds

-290

-821

-804

 

 

STATEMENT OF

CHANGES IN

SHAREHOLDERS’

EQUITY, IFRS

1000 EUR

Share

capi-

tal

and

share

prem-

ium

acc-

ount

Hedg-

ing

res-

erve

Other

res-

erves

Re-

tained

earn-

ings

Mino-

rity

inte-

rest

Total

Interim Report

1.9.2008 –

28.2.2009

Shareholders’ equity 1.9.2008

2878

-93

2100

7537

1336

13758

Cash flow hedging: increase/decrease (hedging reserve)

-292

-292

Deferred taxes’ share

of period movement

76

76

Change in translation difference

25

25

Reclassifications between items

-3

3

0

Net profits/losses recognized directly to shareholders’ equity

-216

-3

28

-191

Profit/loss for the period

-2372

-28

-2401

Total profits and losses

-216

-3

-2344

-28

-2592

Dividend distribution

-287

-46

-333

Shareholders’ equity

28.2.2009

2878

-310

2097

4905

1262

10832

STATEMENT OF

CHANGES IN

SHAREHOLDERS’

EQUITY, IFRS

1000 EUR

Share

capi-

tal

and

share

prem-

ium

acc-

ount

Hedg-

ing

res-

erve

Other

res-

erves

Re-

tained

earn-

ings

Mino-

rity

inte-

rest

Total

Interim Report

1.9.2007 –

29.2.2008

Shareholders’ equity 1.9.2007

2878

22

2106

8438

1393

14835

Cash flow hedging: increase/decrease (hedging reserve)

49

49

Change in translation difference

5

5

Reclassifications between items

-3

3

0

Net profits/losses recognized directly to shareholders’ equity

49

-3

8

53

Profit/loss for the period

-19

47

29

Total profits and losses

49

-3

-11

47

82

Dividend distribution

-1149

-183

-1287

Shareholders’ equity

29.2.2008

2878

70

2103

7277

1302

13630

 

 

STATEMENT OF

CHANGES IN

SHAREHOLDERS’

EQUITY, IFRS

1000 EUR

Share

capi-

tal

and

share

prem-

ium

acc-

ount

Hedg-

ing

res-

erve

Other

res-

erves

Re-

tained

earn-

ings

Mino-

rity

inte-

rest

Total

Annual Report

1.9.2007 –

31.8.2008

Shareholders’ equity 1.9.2007

2878

22

2106

8438

1393

14835

Cash flow hedging: increase/decrease (hedging reserve)

-148

-148

Deferred taxes’ share

of period movement

33

33

Change in translation difference

5

5

Reclassifications between items

-6

6

0

Net profits/losses recognized directly to shareholders’ equity

-115

-6

11

-110

Profit/loss for the period 

238

82

320

Total profits and losses 

-6

249

82

210

Dividend distribution 

-1149

-138

-1287

Shareholders’ equity

31.8.2008

2878

-93

2100

7537

1336

13757

 

 

SEGMENT INFORMATION, IFRS

The business of Vaahto Group is reported as two business segments: Pulp & Paper Machinery and Process Machinery.

NET SALES BY BUSINESS SEGMENTS, IFRS

1000 EUR

Interim

Report

1.9.2008-

28.2.2009

6 months

Interim

Report

1.9.2007-

29.2.2008

6 months

Annual

Report

1.9.2007-

31.8.2008

12 months

Pulp & Paper Machinery

18 748

23 336

39 549

Process Machinery

14 155

18 493

34 406

Net sales between segments

-623

-1

-748

Group total

32 280

41 828

73 207

OPERATING PROFIT OR

LOSS BY BUSINESS

SEGMENTS, IFRS

1000 EUR

Interim

Report

1.9.2008-

28.2.2009

6 months

Interim

Report

1.9.2007-

29.2.2008

6 months

Annual

Report

1.9.2007-

31.8.2008

12 months

Pulp & Paper Machinery

-3 450

-1 778

-3 330

Process Machinery

684

1 976

3 982

Other

-1

-2

-2

Operating profit or loss between segments

9

7

0

Group total

-2 758

204

649

AVERAGE NUMBER OF PERSONNEL BY BUSINESS SEGMENTS

Interim

Report

1.9.2008-

28.2.2009

6 months

Interim

Report

1.9.2007-

29.2.2008

6 months

Annual

Report

1.9.2007-

31.8.2008

12 months

Pulp & Paper Machinery

269

252

249

Process Machinery

148

175

177

Group total

417

427

426

NET SALES BY MARKET AREAS, IFRS

1000 EUR

Interim

Report

1.9.2008-

28.2.2009

6 months

Interim

Report

1.9.2007-

29.2.2008

6 months

Annual

Report

1.9.2007-

31.8.2008

12 months

Finland

12 012

14 234

28 859

Other Europe

16 170

19 964

30 182

North America

252

2 919

3 837

Asia

3 839

4 589

9 881

Africa

0

120

120

Other

7

1

328

Group total

32 280

41 828

73 207

Figures are in thousand euros unless stated otherwise. Figures are unaudited.

NOTES REQUIRED BY IAS 34

Accounting principles

The interim report was drawn up according to the same accounting principles and calculation methods as the previous financial statement, for the fiscal period that ended on August 31, 2008.

Dividends paid

In the period under review, Vaahto Group Plc Oyj paid a dividend of 0.10 euros per share (for both A and K shares) – i.e., a total of 287,230.20 euros.

Lahti, April 17, 2009

VAAHTO GROUP PLC OYJ

Board of Directors

Information:

Antti Vaahto

CEO, Vaahto Group Plc Oyj

tel. +358 40 8232835